Exhibit 10.4
CHANGE OF CONTROL
EMPLOYMENT
AGREEMENT
This Agreement, by and between
Electronic Data Systems Corporation, a Delaware Corporation, its
successors and assigns ("Company"), and Charles S. Feld
("Executive"), dated as of September 30, 2005
("Agreement").
The Compensation and Benefit
Committee of the Company's Board of Directors, on behalf of the
Board of Directors of the Company ("Board"), has determined it is
in the best interests of the Company and its shareholders to assure
the Company will have the continued dedication of Executive,
notwithstanding the possibility, threat or occurrence of a Change
of Control. The Board believes it is imperative to diminish the
inevitable distraction of Executive by virtue of the personal
uncertainties and risks created by a pending or threatened Change
of Control and to encourage Executive's full attention and
dedication to the Company currently and in the event of any
threatened or pending Change of Control. Therefore, in order
to accomplish these objectives, the Compensation and Benefit
Committee of the Board has caused the Company to enter into this
Agreement.
The parties hereby agree as follows:
1. Effect of
Agreement.
Unless and until there occurs,
during the Term of this Agreement, a Change of Control or a
termination of Executive's employment in anticipation of a Change
of Control as contemplated by Section 3, this Agreement shall have
no effect and shall not provide any rights or benefits to
Executive. Similarly, unless and until there occurs, during
the Term of this Agreement, a Change of Control or a termination of
Executive's employment in anticipation of a Change of Control as
contemplated by Section 3, and unless contrary to applicable law or
the terms of a written contract executed by and/or approved by the
Chief Executive Officer of the Company, employment with the Company
remains of an indefinite term and may be ended, with or without
cause, at any time by either Executive or the Company, with or
without previous notice.
2. Terms of
Employment.
This Section 2 sets forth the terms
and conditions on which the Company agrees to employ Executive
during the period (the "Protected Period") beginning on the first
day during the Term of this Agreement on which a Change of Control
occurs and ending on the second anniversary of that date, or such
earlier date as Executive's employment terminates as contemplated
by Section 3.
(A) Position and
Duties.
(1) During the Protected Period,
Executive's services shall be performed at the office where
Executive was employed immediately preceding the date of the Change
of Control or any office or location less than 50 miles from such
office, unless Executive is on international assignment on the date
of the Change of Control and is relocated as a result of
Executive's being repatriated pursuant to the terms of Executive's
international assignment agreement as in effect before the date of
the Change of Control.
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(2) During the Protected Period,
Executive agrees to devote reasonable attention and time during
normal business hours (except when on authorized vacation, holidays
or sick leave) to the business and affairs of the Company, and, to
the extent necessary to discharge the responsibilities assigned to
Executive, to use Executive's reasonable best efforts to perform
faithfully and efficiently such responsibilities; provided, that
Executive may (A) contingent upon obtaining all required approvals,
serve on corporate, civic or charitable boards and committees, (B)
fulfill speaking engagements, and (C) manage personal investments,
so long as such activities do not significantly interfere with the
performance of Executive's responsibilities as an employee of the
Company; and provided, further, that to the extent that any such
activities have been conducted by Executive before the date of the
Change of Control, the continued conduct of such activities after
the date of the Change of Control shall not be deemed to
significantly interfere with the performance of Executive's
responsibilities to the Company.
(B) Compensation.
(1) Base Salary. During the
Protected Period, Executive shall continue to receive the same
annual base salary Executive was receiving immediately preceding
the date of the Change of Control. Executive shall be paid at such
intervals as the Company pays executive salaries generally. During
the Protected Period, Executive's annual base salary shall be
reviewed for possible increase at least annually, beginning no more
than 12 months after the last such annual review prior to the date
of the Change of Control.
(2) Incentive Compensation.
Executive shall remain eligible to receive bonuses and other forms
of short-term incentive compensation. In addition, during the
Protected Period, Executive shall remain eligible to participate in
all long-term, stock-based and other incentive plans, practices,
policies and programs generally applicable to peer executives of
the Company.
(3) Savings and Retirement Plans.
During the Protected Period, Executive shall remain eligible to
participate in the savings and retirement plans, practices,
policies and programs generally applicable to peer executives of
the Company. Without limiting the generality of the foregoing,
Executive shall continue to participate in the EDS Supplemental
Executive Retirement Plan.
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(4) Welfare Benefit Plans. During
the Protected Period, Executive and/or Executive's eligible
dependents, as the case may be, shall remain eligible to
participate in and receive benefits under welfare benefit plans,
practices, policies and programs provided by the Company (including
without limitation medical, prescription drug, dental, vision,
disability, life insurance, accidental death and dismemberment, and
travel accident insurance plans and programs) to the extent
generally applicable to peer executives of the
Company.
(5) Expenses. During the Protected
Period, Executive shall be entitled to receive prompt reimbursement
for all reasonable expenses incurred by Executive in accordance
with the policies, practices and procedures of the Company to the
extent generally applicable to peer executives of the
Company.
(6) Fringe Benefits. During the
Protected Period, Executive shall be entitled to fringe benefits in
accordance with the plans, practices, programs and policies of the
Company to the extent generally applicable to peer executives of
the Company.
(7) Vacation. During the Protected
Period, Executive shall be entitled to paid vacation in accordance
with the plans, policies, programs and practices of the Company as
in effect for Executive immediately preceding the date of the
Change of Control.
3. Termination of
Employment.
(A) By the Company. The Company may
terminate Executive's employment during the Protected Period for
Cause or without Cause.
(B) By Executive. Executive may
terminate employment during the Protected Period for Good Reason or
without Good Reason.
(C) Termination In Anticipation of a
Change of Control. Despite anything in this Agreement to the
contrary, if (1) a Change of Control occurs, (2) Executive's
employment with the Company is terminated by the Company before the
Change of Control occurs in a manner and under circumstances that
would be considered a termination by the Company without Cause if
it had occurred during the Protected Period, and (3) it is
reasonably demonstrated by Executive that such termination of
employment was at the request of a third party that had taken steps
reasonably calculated to effect the Change of Control or otherwise
arose in connection with or in anticipation of the Change of
Control, then such termination shall be treated for all purposes of
this Agreement as a termination by the Company without Cause during
the Protected Period.
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4. Obligations of the
Company upon Termination.
(A) If, during the Protected
Period, the Company involuntarily terminates Executive's employment
other than for Cause (excluding termination for death or
Disability) or Executive voluntarily terminates employment for Good
Reason and Executive executes a separation agreement substantially
in the form attached hereto as Exhibit "A" ("Separation
Agreement"):
(1) the Company shall pay to
Executive, within 30 days after the Date of Termination, or if
later, within 5 days of the Separation Agreement signed by
Executive becoming legally effective, the following:
(a) a lump sum payment equal to
Executive's accrued, but unpaid base salary through the date of
termination, less all applicable deductions;
(b) a lump sum payment equivalent to
2.99 times Executive's final annual base salary, less all
applicable deductions;
(c) a lump sum payment equivalent to
2.99 times Executive's annual performance bonus target as approved
by the Compensation and Benefits Committee of EDS' Board of
Directors for the year in which he/she is terminated, less all
applicable deductions;
(d) excluding any performance based
restricted stock units, all deferred EDS stock units, restricted
stock units, and/or stock options awarded to Executive that remain
outstanding on the date of termination shall immediately vest,
shall immediately be freed of any restrictions regarding their sale
or transfer (other than any such restrictions arising by operation
of law or pursuant to the terms of any applicable deferral plan),
and with regard to all stock options, other than those stock
options awarded to Executive on January 9, 2004, as part of the
acquisition of The Feld Group, Inc., they shall be exercisable for
a period of one (1) year from the date of termination. With
respect to those stock options awarded to Executive as part of the
acquisition of The Feld Group, Inc., they shall be exercisable for
the full term of the award as defined in the grant agreement;
and
(e) with regard to any
performance based restricted stock units awarded to Executive, the
disposition of such awards upon termination of employment following
a Change of Control shall be determined pursuant to the specific
provisions of each individual performance based restricted stock
unit award agreement(s). This Agreement shall have no force
and/or effect with regard to any performance based restricted stock
unit awarded to Executive. For purposes of this Agreement, the term
performance based restricted stock unit shall mean restricted stock
units awarded to Executive pursuant to a grant agreement specifying
that the actual number of stock units to ultimately be awarded at
the end of the performance period is contingent upon specified
criteria related to EDS' performance.
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(B) If Executive's employment
is involuntarily terminated for Cause, death or Disability during
the Protected Period, the Company shall provide to Executive
his/her accrued, but unpaid base salary through the date of
termination, less all applicable deductions, and shall have no
other severance and/or separation obligations to Executive pursuant
to the terms of this Agreement. If Executive voluntarily
terminates his/her employment during the Protected Period other
than for Good Reason, the Company shall pay his/her accrued, but
unpaid base salary through the date of termination, less all
applicable deductions, and shall have no other severance and/or
separation obligations to Executive pursuant to the terms of this
Agreement.
(C) Notwithstanding any
provision in this Agreement to the contrary, this Agreement will be
interpreted, applied and to the minimum extent necessary,
unilaterally amended by EDS, so that the Agreement does not fail to
meet, and is operated in accordance with, the requirements of
Section 409A of the Internal Revenue Code.
5. Exclusivity of
Benefits.
If Executive receives benefits
pursuant to this Agreement, Executive understands and acknowledges
he/she shall not be eligible to receive any other form of severance
and/or separation pay or benefits from the Company, except as may
otherwise be provided for pursuant to the terms of an individual
performance based restricted stock unit award agreement(s).
Further, if Executive receives benefits pursuant to this Agreement,
Executive understands and acknowledges the compensation, benefits
and other consideration provided hereunder shall constitute his/her
sole and exclusive rights to any payments or benefits from EDS, and
Executive shall receive no consideration or benefits other than
those expressly granted herein, except for benefits to which he/she
may be entitled, if any: (i) under any EDS plan qualified under
Section 401(a) of the Internal Revenue Code, including the EDS
Retirement Plan and EDS 401(k) Plan; (ii) under the EDS Benefit
Restoration Plan or EDS Supplemental Executive Retirement Plan
("SERP"); (iii) under the EDS Executive Deferral Plan; (iv)
pursuant to any indemnification agreements between Executive and
EDS; or (v) under any applicable directors and officers or other
liability insurance policies.
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6. Certain Additional Payments by
the Company.
(A) If any Payment is subject to the
Excise Tax, then the Company shall pay the Executive a Gross-Up
Payment (regardless of whether the Executive's employment has
terminated). Notwithstanding the foregoing, if the Parachute Value
of all Payments does not exceed 110% of the Safe Harbor Amount,
then the Company shall not pay the Executive a Gross-Up Payment,
and the Payments due under this Agreement shall be reduced so that
the Parachute Value of all Payments, in the aggregate, equals the
Safe Harbor Amount; provided, that if even after all Payments due
hereunder are reduced to zero, the Parachute Value of all Payments
would still exceed the Safe Harbor Amount, then no reduction of any
Payments shall be made. The reduction of the Payments due
hereunder, if applicable, shall be made by first reducing the
payments under Section 4(A)(1)(b), (c) and/or (d), in that order,
unless an alternative method of reduction is elected by the
Executive, subject to approval by the Company, and in any event
shall be made in such a manner as to maximize the economic present
value of all Payments actually made to the Executive, determined by
the Accounting Firm as of the date of the Change of Control for
purposes of Section 280G of the Code using the discount rate
required by Section 280G(d)(4) of the Code.
(B) All determinations required to
be made under this Section 6, including whether and when Gross-Up
Payments are required and the amount of such Gross-Up Payments,
whether and in what manner any Payments are to be reduced pursuant
to the second sentence of Section 6(A), and the assumptions to be
utilized in arriving at such determinations, shall be made by the
Accounting Firm, and shall be binding upon the Company and the
Executive, except to the extent the Internal Revenue Service or a
court of competent jurisdiction makes an inconsistent final and
binding determination. The Accounting Firm shall provide detailed
supporting calculations both to the Company and the Executive
within 15 business days after receiving notice from the Executive
that there has been a Payment or such earlier time as may be
requested by the Company. All fees and expenses of the Accounting
Firm shall be borne solely by the Company. Any Gross-Up Payment
that becomes due pursuant to this Section 6 shall be paid by the
Company to the Executive within five days of the receipt of the
Accounting Firm's determination, or, if later, at least 20 business
days before the Executive is obligated to pay the related Excise
Tax. As a result of the uncertainty in the application of Section
4999 of the Code at the time of the initial determination by the
Accounting Firm hereunder, it is possible that Gross-Up Payments
that will not have been made by the Company should have been made
(an "Underpayment"). In the event the Accounting Firm determines
that there has been an Underpayment or the Executive is required to
make a payment of any Excise Tax as a result of a claim described
in Section 6(C), then the Accounting Firm shall determine the
amount of the Underpayment that has occurred and any such
Underpayment shall be promptly paid by the Company to or for the
benefit of the Executive.
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(C) The Executive shall notify the
Company in writing of any claim by the Internal Revenue Service
that, if successful, would require the payment by the Company of a
Gross-Up Payment. Such notification shall be given as soon as
practicable, but no later than 10 business days after the Executive
is informed in writing of such claim. The Executive shall apprise
the Company of the nature of such claim and the date on which such
claim is requested to be paid. The Executive shall not pay such
claim prior to the expiration of the 30-day period following the
date on which the Executive gives such notice to the Company (or
such shorter period ending on the date that any payment of taxes
with respect to such claim is due). If the Company notifies the
Executive in writing prior to the expiration of such period that
the Company desires to contest such claim, the Executive
shall:
(1) give the Company any
information reasonably requested by the Company relating to such
claim,
(2) take such action in
connection with contesting such claim as the Company shall
reasonably request in writing from time to time, including without
limitation accepting legal representation with respect to such
claim by an attorney reasonably selected by the Company,
(3) cooperate with the Company
in good faith in order effectively to contest such claim,
and
(4) permit the Company to
participate in any proceedings relating to such claim; provided,
however, that the Company shall bear and pay directly all costs and
expenses (including additional interest and penalties) incurred in
connection with such contest, and shall indemnify and hold the
Executive harmless, on an After-Tax basis, for any Excise Tax or
Taxes imposed as a result of such representation and payment of
costs and expenses. Without limitation on the foregoing provisions
of this Section 6(C), the Company shall control all proceedings
taken in connection with such contest, and, at its sole discretion,
may pursue or forgo any and all administrative appeals,
proceedings, hearings and conferences with the applicable taxing
authority in respect of such claim and may, at its sole discretion,
either direct the Executive to pay the Taxes claimed and sue for a
refund or contest the claim in any permissible manner, and the
Executive agrees to prosecute such contest to a determination
before any administrative tribunal, in a court of initial
jurisdiction and in one or more appellate courts, as the Company
shall determine; provided, however, that, if the Company directs
the Executive to pay such claim and sue for a refund, the Company
shall advance the amount of such payment to the Executive, on an
interest-free basis, and shall indemnify and hold the Executive
harmless, on an After-Tax basis, from any Excise Tax or Taxes
imposed with respect to such advance or with respect to any imputed
income in connection with such advance; and provided, further, that
any extension of the relevant statute of limitations is limited
solely to such contested amount. Furthermore, the Company's control
of the contest shall be limited to issues with respect to which the
Gross-Up Payment would be payable hereunder, and the Executive
shall be entitled to settle or contest, as the case may be, any
other issue raised by the Internal Revenue Service or any other
taxing authority.
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(D) If, at any time after receiving
a Gross-Up Payment or an advance pursuant to Section 6(C), the
Executive receives any refund of the associated Excise Tax, the
Executive shall (subject to the Company's having complied with the
requirements of Section 6(C), if applicable) promptly pay to the
Company the amount of such refund, together with any interest paid
or credited thereon net of all Taxes applicable thereto. If, after
the Executive receives an advance pursuant to Section 6(C), a
determination is made that the Executive is not entitled to any
refund with respect to such claim and the Company does not notify
the Executive in writing of its intent to contest such denial of
refund prior to the expiration of 30 days after such determination,
then such advance shall be forgiven and shall not be required to be
repaid, and the amount of any Gross-Up Payment owed to the
Executive shall be reduced (but not below zero) by the amount of
such advance.
(E) Notwithstanding any other
provision of this Section 6, the Company may, in its sole
discretion, withhold and pay over to the Internal Revenue Service
or any other applicable taxing authority, for the benefit of the
Executive, all or any portion of any Gross-Up Payment, and the
Executive hereby consents to such withholding.
(F) Any other liability for unpaid
or unwithheld Excise Taxes, other than those described above, is
borne exclusively by the Company, in accordance with Code Section
3403. The assumption of such liability by the Company shall
not in any manner relieve the Company of any of its obligations
under Section 6 of the Agreement.
7. Successors.
(A) This Agreement is personal to
Executive and shall not be assignable by Executive other than by
will or the laws of descent and distribution.
(B) This Agreement shall inure to
the benefit of and be binding upon the Company and its successors
and assigns. Except as provided in Section 7(C), without the prior
written consent of Executive, this Agreement shall not be
assignable by the Company.
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(C) The Company shall require any
successor (whether direct or indirect, by purchase, merger,
consolidation or otherwise) to all or substantially all of the
business and/or assets of the Company to assume expressly and agree
to perform this Agreement in the same manner and to the same extent
that the Company would be required to perform it if no such
succession had taken place.
8. Miscellaneous.
(A) This Agreement shall be governed
by and construed in accordance with the laws of the State of
Delaware, without reference to principles of conflict of laws. The
captions of this Agreement are not part of the provisions hereof
and shall have no force or effect. Except as provided in
Paragraph 4(c) above, this Agreement may not be amended or modified
other than by a written agreement that is specifically identified
as an amendment of this Agreement and executed by the Executive and
the Chief Executive Officer of the Company.
(B) All notices and other
communications hereunder shall be in writing and shall be given by
hand delivery to the other party or by registered or certified
mail, return receipt requested, postage prepaid, addressed as
follows:
If to Executive:
Charles S. Feld
[address]
If to the Company:
Telecommunications Number:
(972) 605-1926
5400 Legacy Drive
H3-1A-58
Plano, Texas 75024
Attention: Michael E.
Paolucci
Vice
President, Global Compensation & Benefits
With a copy to:
Telecommunications Number (972)
605-0791
5400 Legacy Drive
H3-3A-05
Plano, Texas 75024
Attention: Nick
Linn
Vice
President, Labor & Employment
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or to such other address as either
party shall have furnished to the other in writing. Notice and
communications shall be effective when actually received by the
addressee.
(C) The invalidity or
unenforceability of any provision of this Agreement shall not
affect the validity or enforceability of any other provision of
this Agreement.
(D) The Company may withhold from
any amounts payable under this Agreement such Taxes as shall be
required to be withheld pursuant to any applicable law or
regulation.
9. Certain Definitions.
The following terms shall have the
meanings set forth below for purposes of this Agreement.
"Accounting Firm" means any law firm
or the certified public accounting firm among those reg
